Rise in New Home Loans Points to Market Recovery

Recently-released figures from the Australian Prudential Regulation Authority (APRA) show the number of new home loans being approved has risen sharply (up 28% in the June quarter). This indicates that the residential property market is beginning to recover.

Loans to property investors are up 35% to $27.8 billion in the quarter, making property investment the fastest growing category, while owner-occupier loan approvals also rose sharply, up 25% to $51.2 billion.

According to Tom Kennedy at JP Morgan, falling interest rates and rising house prices are creating a climate that is attractive to property investors. Because they can get higher returns and pay less to service their loans, Kennedy predicted investor interest in property would continue as the market continued to recover.

Another reason investors are turning to property is due to the low returns they are currently receiving from bank deposits. Because of this, more investors are expected to enter the property market in the near future.

Source: http://www.smh.com.au/business/new-home-loans-jump-as-market-picks-up-20130827-2snra.html

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